Banks

The Indian banking sector’s rating has been revised to stable from positive by rating agency ICRA on Wednesday. It expects credit growth and profitability metrics to moderate in FY25, even as it expects them to remain healthy. A stable outlook indicates a low likelihood of rating change in the near to medium term. The agency expects credit growth to be anywhere between 11.7-12.5% in FY25. It was at around 16.3% in FY24.

The gross non-performing assets (GNPA) of the Indian banking system are set to improve further to up to 2.1 per cent by the end of FY25, a report said on Friday. GNPAs are likely to come at 2.5-2.7 per cent in FY24 and will improve further to 2.1-2.4 per cent by the end of FY25, domestic rating agency Care Ratings said in the report.

According to Fitch, while net interest margins (NIMs) are anticipated to narrow by 10 to 20 basis points over the next two years from the current cyclical peak of 3.6 per cent in the nine months of the financial year ending March 2024 (9MFY24), the sector's earnings resilience will persist.

India’s gross domestic product (GDP) has been growing at a much faster clip than expected — most government agencies and financial institutions peg it at over 7%. Yet, the households tell another story. Most of them saw their real income growth — after accounting for inflation — fall by 3.1% in the last five years.

In the age of digital banking, there are very few reasons to step into the bank. Even if one decides to walk down to their closest branch, most officials advise customers to use phone banking or an app-based transaction to avail the services. So, in urban centres, many such bank branches on every major street may seem a bit redundant.

The Ministry of Finance has written to public sector banks to reassess their gold loan procedures amid concerns over risky debt as gold prices surge, informed a senior official. This comes against the backdrop of a rise in gold loans year-on-year basis. Gold loans surged by 17 per cent mirroring the 16.6 per cent increase in gold prices and loans against gold jewellery reached Rs 1.01 lakh crore as of January 26.

The salary of DBS Bank's Indian origin chief executive Piyush Gupta was cut by a hefty 27 per cent to SGD 11.2 million (about Rs 69 crore) last year for various incidents of technical glitches, the bank said in its annual report. In 2022, Gupta received a salary of SGD 15.4 million. The Singapore-based bank had, in February, said that the 2023 variable compensation for its CEO and other members of the group management committee has been cut, holding them accountable for the series of digital disruptions that took place last year.

According to a press release, the central bank prohibited card issuers from entering into agreements with card networks that restrict them from availing the services of other card networks. In a circular released on Wednesday, the RBI mandated that card issuers must provide their eligible customers with the option to choose from multiple card networks at the time of issuance or renewal. According to a press release, the central bank prohibited card issuers from entering into agreements with card networks that restrict them from availing the services of other card networks.

Veteran banker Uday Kotak on Tuesday said that too much regulatory guardrails could impede economic growth and halt India's journey towards a developed nation. Regulators should not be too conservative and cautious but must respond fast to "accidents" in the respective sectors, he said while addressing a two-day event organised by National Financial Reporting Authority (NFRA).

Financial services company Paytm said on Monday that Vijay Shekhar Sharma has stepped down as Non-Executive Chairman and Board Member of Paytm Payments Bank Ltd (PPBL). In a BSE filing, the company said that the PPBL has reconstituted the Board with Central Bank of India's former Chairman Srinivasan Sridhar, retired IAS officers Debendranath Sarangi, and Rajni Sekhri Sibal, and Bank of Baroda's former Executive Director Ashok Kumar Garg.

India’s retail loan growth moderated in the second quarter of FY24, especially in consumption-led segments like credit cards, consumer durables, and personal loans. A report by TransUnion CIBIL Credit Market Indicator says that it’s because financial institutions tightened the supply of credit. Growth in home loan originations remained stagnant on a year on year basis overall. The reason being a 4% fall in the origination of loans under ₹35 lakh in Q4 of FY24. Those between ₹35-75 lakh grew by 8%, even as those over ₹75 lakh grew at a healthy rate of 23%.

India’s largest bank SBI saw its third quarter profits slip by 35.5% as it took a ₹7,100 exceptional charge. It provided for pension and gratuity liabilities as it reached an agreement with the unions for a 17% wage hike last November. These costs might flow into Q4 as well with a normalization expected only in FY25. Yet, the street is impressed with its asset quality improvement and business outlook.

The public sector Indian Bank on Wednesday reported a 52 per cent jump in net profit at Rs 2,119 crore in the December quarter, on the back of improvements in core income and a reduction in bad loans. The Chennai-based lender had earned a net profit of Rs 1,396 crore in the same quarter a year ago. The operating profit of the bank was almost flat at Rs 4,097 crore as against Rs 4,061 crore in December 2022.

Canara Bank on Wednesday reported a 26.87% increase in net profit to Rs 3,656 crore for the October-December quarter of the current financial year compared to the corresponding figure of Rs 2,881.5 crore in the same period last year.

State-owned Indian Overseas Bank (IOB) on Wednesday reported 30 per cent rise in net profit at Rs 723 crore for December quarter 2023-24, on the back of improvement in core income and reduction in bad loans. The Chennai-based lender had earned a net profit of Rs 555 crore in the same quarter a year ago

HDFC Bank opened 2.5% lower on Thursday, after a sharp 9% plunge on Wednesday as its third quarter earnings report shocked the street. The bank, which reported its second earnings report after merger with parent HDFC, saw its loan to deposit ratio (LDR) go up to a tight 110%. Its pre-merger LDR was anywhere between 85-89%. The Reserve Bank of India is generally comfortable if banks maintain their LDRs between 70-75%. By this, India’s largest private bank will have the highest LDR. The market fears that it might not be the only one.

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The Reserve Bank of India earlier this month has directed Bajaj Finance “to stop sanction and disbursal of loans under its two lending products ‘eCOM’ and ‘Insta EMI Card’, with immediate effect”. Despite the rap on its knuckles, the Street does not see this as a structural issue and the share prices of this non-banking finance company are unlikely to come under pressure over the medium-term. However, the impact on stock price will depend on how soon this gets rectified.

The Reserve Bank on Thursday imposed a monetary penalty of Rs 90.92 lakh on Axis Bank and Rs 42.78 lakh on gold loan firm Manappuram Finance for violation of certain directions of the banking sector regulator. The fine has been imposed for non-compliance with certain directions issued by the RBI on 'Reserve Bank of India (KYC) Directions, 2016', 'Loans and Advances - Statutory and Other Restrictions', 'Guidelines on Managing Risks and Code of Conduct in Outsourcing of Financial Services by banks', and 'Code of Conduct for Opening and Operating Current Accounts', the central bank said in a statement.

As much as Rs 820 crore were credited to account holders of UCO Bank in what the lender described as an erroneous transfer and has initiated a process to reverse the same. The bank has recovered Rs 649 crore or 79 per cent of the amount erroneously credited to some accounts of the bank via Immediate Payment Service (IMPS).